Plagued by concerns over fraud, outright theft and lack of controls, Initial Exchange Offering (IEOs) is a necessary evolution from the chaotic, Ethereum fueled initial coin offerings (ICOs) of late 2017 that catalyzed the last crypto bull run. There are other alternatives evolving from ICOs but what we can gather is that the number of Initial Exchange Offerings would rise more than 730 percent in the next 18 months hitting triple digits.
Trailblazing the scene is Binance and throughout their innovation, the exchange takes the task of bearing the risk on behalf of the investor, vetting the project, allowing crowd funding and thereafter listing the token of the project on their platform, allowing immediate exchange with other high liquid coins gifting the project immediate liquidity.
However, there is one huge problem. A crypto analyst, investor and trader has noted one common trend with all these projects. While relaying his observation, Alex Kruger, an economist claiming to be “bridging crypto and global macro” quips saying: “These are all of Binance IEOs since the tokens started trading publicly. Can you spot a pattern?” before answering his rhetoric, confirming investors fears: “the four 2019 IEOs have been crashing since tokens started trading publicly – and that in a “bull” market, where almost everything else pumped.”
IEOs Have Been a Success
Thus far, there have been four successful IEOs from the Binance Launchpad. The Launchpad has been described by Changpeng Zhao, the CEO of Binance as “transformative” has seen the likes of BitTorrent—a decentralized app that runs on the Tron platform-raise $7.2 million in a record 18 minutes despite being slowed down by technical glitches that saw the offering dominated by whales soaking up all BTT TRC-20 tokens.
Other record breaking IEOs include Fetch.AI which raised $6 million in 22 seconds, Celer and recently, Matic where funds were crowd funded via Binance’s Lottery system. Behind IEOs growing popularity is the growing ecosystem around it like increasing number of consulting firms like Priority for example, the fact that fraud can be eliminated case in point where Bittrex had to cancel the RAID IEOs hours before the crowd sale after the partnership between the start-up and e-game analytics firm OP.GG collapsed.
But from Alex critical analysis, it appears that all IEOs projects were pumped ahead of the crowd sale. Because the markets have since cooled down allowing for other supply-demand dynamics to fairly price the token, the project’s asset is free falling in response.
Of note is that all these projects are 50 percent or more down from their listing prices meaning investors are deep in negative territory and would take a while before they break even. It may be caution and behind the reasoning of another Twitter user who commented saying:
“ I don’t understand why companies that hold assets want their token launched on an IEO – even Binance, all it does is make it look bad You’re paying for a pump., some marketing and then your token becomes a part of a long list of IEO memes.”
Do you think the market price action is playing out and pricing the asset fairly or these tokens were pumped through aggressive marketing? Let us know in the comment sections below.
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